Changes To Estate Tax Explained In This Week's Wealth Update

Stocks closed lower on Friday and the details will follow but we begin this week's wealth management report with news about the new tax law. The tax code overhaul became effective in 2018 and brought a lot of changes, but for the estate tax, the most far-reaching result was what did not happen.

Chiefly, you didn't lose the capital gains break on inherited assets when they're sold. For tax purposes, the value of an asset, when sold, rises to its current market-value even though it was originally purchased at a lower price. The result is a lighter tax when an heir sells off stocks or other holdings that were part of the bequest.

For a narrow slice of the population, one weighty thing did happen with tax reform: Very wealthy households received a better deal on how much of their estate is taxable. Their fondest wish did not come true, to be sure, and the new tax law did not kill what is derisively called "the death tax." However, Uncle Sam's claim on inherited mega-money has been shrunk by the new law. Starting in 2018, the exemption for estate tax nearly doubles. The amount that can be passed along to heirs tax-free rises in 2018 to $11.2 million, from $5.5 million for individuals, and to $22.4 million, from $11 million for couples.

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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

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